New assault on regional inequalities

THE European Commission this week urged national governments to spend most of their share of EU regional development money between 2000 and 2006 on improving communication and transport networks, and boosting small and medium-sized firms.

The move follows the publication of a Commission report on regional economic disparities which shows that many economically backward regions are still lagging behind even though they have received billions of euro in assistance, and that unemployment in many parts of the Union remains at "unacceptable levels".

In a set of accompanying guidelines for regional development spending in the opening years of the new millennium, Regional Affairs Commissioner Monika Wulf-Mathies argues that efforts must now be made to improve communication and transport links between the regions and major economic centres. She also says that access to start-up capital for would-be entrepreneurs in 'lame duck' regions must be made easier.

Tourism, culture and the "social economy" - defined as semi-private organisations such as agricultural cooperatives, credit unions and mutual insurance groups - are identified as the sectors with the greatest potential for growth.

Wulf-Mathies also calls for the introduction of training programmes which are more closely tailored to the needs of the labour market. Employers are urged continuously to upgrade the skills of their workers.

The initiative stresses the need to improve employment opportunities for women, disabled people, ethnic minorities and other groups which often face discrimination. It also argues that EU governments should consider ways of measuring progress in creating jobs for disadvantaged groups.

Governments will also be required to coordinate their regional development activities more closely to avoid duplicating projects under different Union funding programmes within the same area.

The guidelines make it clear that the use of EU funds to close the regional income gap will be subject to stricter conditions than before. Although more assistance will be offered to small and medium-sized firms, this aid will take the form of "reimbursable advances" rather than straightforward grants. In addition, governments are encouraged to "pay particular attention to monitoring performance".

The guidelines and the report on regional economic disparities are intended to provide pointers for governments in drawing up specific projects for helping backward regions to catch up.

These programmes must be forwarded to the Commission by the end of the year.